Sacklers Can Be Shielded From Opioid Liability, Appeals Court Rules - New York Times

Members of the Sackler family, the billionaire owners of Purdue Pharma, will receive full immunity from all civil legal claims — current and future — over their role in the company’s prescription opioids business, a federal appeals court panel ruled on Tuesday.

The ruling gives the family the sweeping protection that it has been demanding for years, in exchange for payment of up to $6 billion of the family’s fortune to help address the ongoing ravages of the opioid crisis.

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Unless it is successfully appealed to the Supreme Court — an unlikely prospect, legal experts said — the new ruling will close the door on Purdue’s hotly contested bankruptcy restructuring, which began nearly four years ago. The bankruptcy is at the core of a plan intended to resolve thousands of opioid cases against the company nationwide, plus roughly 400 against individual Sackler family members.

According to the plan, Purdue would be restructured into a new entity called Knoa Pharma that will manufacture medications for addiction reversal and treatment as well as continue to produce other drugs, including OxyContin. It will be overseen by a public board. Over time, Knoa Pharma is expected to contribute at least many hundreds of millions dollars more to plaintiffs.

Some close observers of the Purdue case applauded the ruling, calling it a pragmatic reading that could now loosen up billions of dollars for states, local governments, tribes and individuals who sued Purdue for its early and aggressive role in marketing OxyContin as a nonaddictive pain treatment.

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But others said the Sacklers had received a significant pass. “Bankruptcy was not meant to be an alternative justice system for powerful corporations and their superrich owners. But that is the effect and perception when courts read the law to provide extraordinary protections well beyond what Congress authorized,” said Melissa B. Jacoby, a law professor at the University of North Carolina at Chapel Hill.

A bankruptcy filing typically puts a temporary halt on a company’s creditors, including on lawsuits. The major issue in this case was that even though Purdue had filed for bankruptcy, the Sacklers, as individuals, had not. As a result, plaintiffs who fought the plan contended, the Sacklers should not receive the benefit of their company’s liability protection.

The Sacklers stepped down from Purdue’s board of directors in 2018 and have had no direct involvement in the company since then.

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The Sacklers’ liability protection does not extend to criminal prosecutions, should any ever be filed.

Purdue filed for bankruptcy in September 2019, as the rising opioid cases against the company turned into a torrent.

Update: The Supreme Court has temporarily blocked this ruling as of August 10, 2023 pending further argumentation in response to an emergency request from the Biden administration’s Department of Justice.

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